Policies

All of the default policies for Stern courses apply to this course. Exceptions: As long as they are quiet and non-distracting, laptops and similar devices may be used for purposes of note-taking. Laptops and similiar devices (with the exception of financial caculators) may not be used for in-class exams.

Please note: for the exams, you cannot use an iPhone, iTouch, Droid or similar general-purpose device that has a financial calculator app.

What's the course about?

This course is about financial markets: financial assets (securities) and how they are valued and traded. Financial markets constitute the financial environment in which the firm operates. For the most part, we take the viewpoint of a user of the financial market: an investor, investment advisor, or someone using the market to hedge (reduce) risk.

Prerequisites

The prerequisites for this course are introductory courses in accounting, statistics and economics. Finance is very mathematical and you will need to utilize material developed in the prerequisite courses. If you have not taken these courses, you may have great difficulty in this one. Among the prerequisites, the most important is statistics. If it's been a while and/or you'd like to brush up, spend some time with the statistics primer.

Over-qualifications

If you were an undergrad finance major, or if you've had similar exposure to the material, you should probably be skipping this course. In the first place, you will be thoroughly bored. Secondly, it is a misallocation of your time and money. Thirdly, a prospective employer is likely to discount a high grade.

Course requirements / Deliverables

There will be four problem sets (to be handed in), an in-class midterm and a final exam.

Grading

Your final grade in the course will be 35% Midterm, 50% Final and 15% problem sets. (I'll compute a numerical weighted average and then convert this to a letter grade.) These weights are tentative.

On the midterm and final, I'll compute a curved score that will approximately adjust for any differences in difficulty between the two. It is the curved scores that will go into the final average.

When I hand back the midterms, I'll also provide a corresponding letter grade (like "A grade of 88 is roughly a B+".) The correspondence is approximate: it is the numerical grade that goes into the final average - not the letter grade.

Final letter grades will be determined in accordance with the Official Finance Department grading standards: Grade Distributions for core graduate finance course (B01.2311): A 10%; A- 10 to 15%; B+ 10%; B and B- 50 to 60%; C+, C, C-, D and F 10 to 15%; IP and IF No more than 5%

Accommodations

If you have a qualified disability and will require academic accommodation during this course, please contact the Moses Center for Students with Disabilities (CSD, 998-4980) and provide me with a letter from them verifying your registration and outlining the accommodations they recommend. If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.

Class sessions

The classes are lecture format. The content overlaps with the book. Sometimes I’ll be trying to reinforce the intuition behind a principle; sometimes I’ll be trying to extend the principle beyond the book’s coverage; sometimes I’ll be applying the material to a current problem.

I encourage you to ask questions in class. They help me pace the class and get a sense of what is and isn’t coming across. One thing, though. Sometimes people will ask questions that are sharp, relevant and important, but also happen to be two miles beyond where I think the class should be (see “over-qualifications,” above).  Don't let yourself fall under the illusion that the such questions reflect the average level of your classmates.

I'll usually hand out copies of the slides at the start of class. In the course of the class, the slides will get marked up. Within a day or so after the class, I'll post the marked-up slides to the web.

Streaming videos are generally available about 24hrs after the class. These videos are provided on a "best efforts" basis. There are no guarantees that the videos will be available or usable.

Texts, etc.

We'll be using:

• Bodie, Kane and Marcus (BKM), Investments, 9th edition. This is a new edition.
• Problem solutions to BKM.

The bookstore sells these two items as a shrink-wrapped pack.

The readings are not the same for all sections of this course. Some sections of this course might be using "Essentials of Investments". We are using "Investments". Some sections of the course are also using Chapters 4, 5, and 8 from Ross, Westerfield and Jordan (RWJ), Essentials of Corporate Finance. We are not. For other issues see the books link.

The RWJ material deals with the time value of money. RWJ do a very nice job of explaining it. The material is fairly standard, though, and is adequately covered in other places. We'll be using class notes, supplemented by Wikipedia's material on the time value of money, and the internal rate of return.

Calculator

A financial calculator is necessary to do the problems and quizzes. In addition to the usual arithmetic operations, a financial calculator can compute exponentials, log functions, and present and future values of simple sums and annuities. An ability to compute internal rates of return is sometimes useful, but is not required. The calculator most suitable for the course is the Hewlett-Packard 10B. When I go through a calculation key-by-key, I'll be using HP-10B keystrokes. Also see Calculator links.

Calculator manuals are generally complete but overly-detailed for many purposes. Here are some links to summary material:

• Using a financial calculator (Prof. Pamela Peterson Drake, James Madison University)
• Using your calculator for financial decisions (Dr. Michael Kinsman, Pepperdine University)

Cheating

In my teaching career, I've encountered a handful of incidents involving students sharing information during in-class exams or changing answers on exam papers that have already been graded.

With respect to cheating, the standards of the faculty and your fellow students are very clear. If evidence of cheating comes to my attention by any means, I will prosecute to the extent permitted under faculty guidelines.